Commissioner's Minutes 08-10-05

COMMISSIONERS MINUTES AUGUST 10, 2005

The Commissioners met in special session on the above date in the Commissioner’s Room, basement of the Elmore County Courthouse, 150 South 4^th East, Mountain Home, Idaho. The purpose of the special session was to meet with Bud Way regarding the sale of the Jail Bonds.

Present at the meeting was Chairman Larry Rose, Commissioners Mary Egusquiza and Connie Cruser. Also present was Clerk Gail Best and Deputy Clerk Barbara Steele along with Bud Way, Vice President of Public Finance, Wells Fargo Bank, and Dan Collins in the audience.

Bud Way started the meeting informing the Commissioners that the bonds were pre-marketed and on the first day 40% pre-sold and on the second day a total of 85% of the bonds were sold. The finalized interest rate is 4.09%. Mr. Way stated that once the BRAC (Base Realignment and Closure) was settled with investment agencies the bonds sold quickly. The Public Affairs office at Mountain Home Air Force Base was instrumental in explaining the BRAC.

Commissioner Cruser asked Mr. Way why local investors were not able to buy the bonds. She had told her friends to contact their brokers, as she did, and when she contacted her broker she was told there were not any bonds available. She stated that Mr. Way stated previously that local investors would have a chance to invest in the bond.

Dan Collins also stated he phoned his broker and was told that Wells Fargo did not open it up to his brokerage firm.

Mr. Way stated he was sorry that enough wasn’t done to accommodate the local market.

Commissioner Cruser stated on Monday morning she phoned and was told she could not invest in the bonds.

Mr. Way said he was sorry, and that they were going to open it up to local patrons.

Chairman Rose stated that Wells Fargo told the Commissioners that local investors would be able to invest when the Commissioners were approached by another company to distribute the bonds. Now the Commissioners have to explain to the public why local people couldn’t buy the bonds.

Mr. Way stated that you could have bought the bonds through your broker with Wells Fargo.

It was once again stated by Commissioner Cruser and Dan Collins that they were not able to do so.

Commissioner Rose stated that Wells Fargo should not have told them that local patrons would be able to purchase the bonds, that the County had been lied to.

Mr. Way explained that they did the best they could, they tried to market at the best rate possible. One of the solutions would be to cancel the sale and do it again next week. Mr. Way could not guarantee that we would get the same rate due to the Feds raising the interest rates since the sale. If we comply with this sale, August 24, 2005 is the closing date with investors and they are locked in.

The Commissioners decided it was too late to cancel the sale and were disappointed in the way Wells Fargo handled the deal.

Chairman Rose asked what do we do next?

Mr. Way read the first part of the Resolution into the record. The following is the entire Resolution No. 363-05.

RESOLUTION NO. 363-05

A RESOLUTION OF ELMORE COUNTY, STATE OF IDAHO, AUTHORIZING THE ISSUANCE AND SALE OF $7,500,000 PRINCIPAL AMOUNT OF GENERAL OBLIGATION BONDS, SERIES 2005; PROVIDING FOR THE DATE, FORM, MATURITY, AND DESIGNATION OF SAID BONDS; PROVIDING FOR AND FIXING THE RATE OF INTEREST ON SAID BONDS; PROVIDING FOR THE PAYMENT OF PRINCIPAL OF AND INTEREST ON SAID BONDS; PROVIDING FOR THE REGISTRATION AND AUTHENTICATION OF SAID BONDS; FINDING THAT A PRIVATE SALE OF SAID BONDS BY NEGOTIATION IS IN THE BEST FINANCIAL INTEREST OF THE COUNTY; SETTING THE TIME, DATE, AND PLACE OF SALE OF SAID BONDS; PROVIDING FOR THE PURCHASE OF THE BONDS AND ACCEPTING THE PURCHASE PROPOSAL OF THE UNDERWRITER, WELLS FARGO BROKERAGE SERVICES, LLC; PROVIDING FOR THE PAYMENT OF PRINCIPLE OF AND INTEREST ON SAID BONDS BY ANNUAL LEVIES OF TAXES; CREATING CERTAIN FUNDS AND ACCOUNTS; PROVIDING FOR OTHER MATTERS PROPERLY RELATING THERETO; PROVIDING FOR A SEVERANCE CLAUSE; AND PROVIDING AN EFFECTIVE DATE AND WAIVING ANY REQUIREMENT FOR FURTHER SEPARATE READINGS OF THIS RESOLUTION.

ELMORE COUNTY, STATE OF IDAHO

GENERAL OBLIGATION BONDS, SERIES 2005

BE IT RESOLVED by the Chairman and Board of Commissioners of Elmore County, State of Idaho, as follows:

WHEREAS, Elmore County, State of Idaho (the “County”), is an Idaho body politic and corporate duly organized and operating under Title 31, Idaho Code, as amended; and

WHEREAS, the Board of Commissioners of the County (the “Board”), by its Resolution No. 348-05, adopted on March 28, 2005 , ordered a special election to be held within said County on May 24, 2005, for the submission to the voters of the County the question of whether or not the County should issue up to $7,500,000 in general obligation bonds to provide funds for the acquisition, construction, improvement and installation of certain jail and associated law enforcement facilities as set forth in said Resolution; and,

WHEREAS, on May 26, 2005, the Board canvassed the returns of said special bond election and found that the requisite two-thirds (2/3) majority of the qualified electors of said County had cast votes in the affirmative; and that said proposition for the issuance of general obligation bonds in the amount of up to $7,500,000 had passed.

NOW, THEREFORE, Be It Further Resolved by the Board of the County, as follows:

Section 1. Bonds Authorized. General obligation bonds of the County, in fully registered form, designated “Elmore County, State of Idaho, General Obligation Bonds, Series 2005" (the “Bonds”), in the aggregate principal amount of $7,500,000 are hereby authorized to be issued, sold, and delivered pursuant to the laws of the State of Idaho, particularly Title 31, Chapter 19, Idaho Code, as amended, and the Municipal Bond Law, Title 57, Chapter 2, Idaho Code, as amended.

Section 2. Purpose of Bonds. The Bonds are being used for the purpose of providing funds to pay the cost of the acquisition, construction, improvement and installation of jail and associated law enforcement facilities for the County, including expanded new facilities and certain other related improvements, equipment, capital items and costs incidental thereto.

Section 3. Description of Bonds; Book Entry.

A. The Bonds shall be issued in the aggregate principal amount of $7,500,000. The Bonds shall be in denominations of $5,000 each, or integral multiples thereof, shall be dated August 15, 2005, shall be issued only in fully registered form, and shall be substantially in the form set forth in Exhibit “A” attached hereto and by this reference incorporated herein. The Bonds shall be numbered separately in a consecutive series, in the manner and with any additional designation as the Bond Registrar (hereinafter defined) deems necessary for the purposes of identification. The Bonds shall mature in the total amounts per year, on August 15, of each year with a final maturity of August 15, 2020, as set forth in the payment schedule attached hereto as Exhibit “B”.

B. The Bonds shall be issued in Book-Entry-Only form in accordance with the Book-Entry-Only System and practices of the Depository Trust Company, New York, New York (the “Depository”), in the form of a single Bond for each maturity of the Bonds aggregating the entire proposed amount of the Bonds, substantially in the form of Exhibit “A” which is annexed hereto and by reference made a part hereof. A single Bond for each maturity of Bonds shall be executed by the manual or facsimile signature of the Chairman of the Board, countersigned and attested by the manual of facsimile signature of the Clerk, and authenticated by the Bond Registrar appointed in Section 7 hereof, and the Official Seal of the County or a facsimile thereof shall be impressed or reproduced thereon. The Bond shall be registered in the name of Cede & Co., as nominee of the Depository, and shall be lodged with the Depository until maturity of the Bonds. The County shall recognize the Depository, or its nominee, as the owner of the Bonds for all purposes. Beneficial ownership interests in the principal amount of $5,000 or integral multiples thereof will be available through entries on the books of banks and broker-dealer participates (the “Participants”) which are related to the Book-Entry-Only System.

C. The County shall have no responsibility or obligation to any Participant or beneficial owner of any interest in the Bonds with respect to (i) the accuracy of the records of the Depository or its nominee with respect to any ownership interest in the Bonds, (ii) the delivery to any Participant or other person, other than the Depository or its nominee, of any notice with respect to the Bonds, or (iii) the payment to any Participant of other person, other than the Depository of its nominee, of any amount with respect to principal of or interest on the Bonds. Payments by the County to the Depository or its nominee of the principal of and interest on the Bonds when due shall be valid and effective to fully satisfy and discharge the County’s obligations with respect to payment of the principal of and interest on the Bonds to the extent of the sums so paid. No person other than the Depository or its nominee shall receive a Bond Certificate evidencing the obligation of the County to make payments of principal and interest pursuant to this Resolution.

D. The standard Representation Letter of the Depository is hereby authorized, and the Chairman of the Board, County Clerk, County Treasurer or other officer of the County shall execute and deliver such Representation Letter on behalf of the County. The County’s execution and delivery of such Representation Letter shall not in any way limit the provisions of Paragraph B of this Section 3 or in any other way impose upon the County any obligation whatsoever with respect to persons having interests in the Bonds other than the Depository or its nominee.

E. (i) The Depository may determine to discontinue providing its services with respect to the Bonds at any time by giving notice to the County and discharging its responsibilities with respect thereto under applicable law.

(2) The Bond Registrar in its sole discretion and without the consent of any other person, may terminate the services of The Depository with respect to the Bonds ir it determines that:

(a) The Depository is unable to discharge its responsibilities with respect to the Bonds, or

(b) A continuation of the requirement that all of the outstanding Bonds be registered in the registration books kept by the Bond Registrar in the name of Cede, or any other nominee of The Depository, is not in the best interest of the beneficial owners of the Bonds.

(3) Upon the termination of the services of The Depository with respect to the Bonds pursuant to subsection E.(ii)(b) hereof, or upon the discontinuance or termination of the services of The Depository with respect to the Bonds pursuant to subsection E.(i) or subsection E.(ii)(a) hereof after which no substitute securities depository willing to undertake the functions of the Depository hereunder can be found which, in the opinion of the Bond Registrar, is willing and able to undertake such functions upon reasonable and customary terms, the Bond Registrar is obligated to deliver Bonds at the expense of the beneficial owners of the Bonds, as described in this Resolution and the Bonds shall no longer be restricted to being registered in the registration books kept by the Bond Registrar in the name of Cede as nominee of the Depository, but may be required in whatever name or names the owner transferring or exchanging Bonds shall designate, in accordance with the provisions of this Resolution.

F. Notwithstanding any other provision of this Resolution to the contrary, so long as any Bond is registered in the name of Cede, as nominee of the Depository, all payments with respect to principal or, premium, if any, and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, in the manner provided in the Representations Letter.

Section 4. Interest on Bonds. The Bonds shall bear interest at a rate or rates as set forth in the bond purchase contract, or final acceptable bid form, for the Bonds, which interest shall be payable commencing February 15, 2006, and semiannually thereafter on each February 15 and August 15 of each year after the first interest payment date, until the respective maturity dates thereof. Interest on the Bonds shall be calculated on the basis of a 360-day year consisting of twelve 30-day months.

Section 5. Payment of Bonds. The principal of the Bonds is payable in lawful money of the United States of America to the Registered Owners thereof, whose names and addresses shall appear on the registration records of the County (the “Bond Register”) maintained by the Bond Registrar designated in Section 7 hereof, upon presentation and surrender of the Bonds at the principal office of the Bond Registrar.

Payment of each installment of interest shall be made to the Registered Owner of each Bond, at his or her address appearing on the Bond Register on the 15^th day next preceding the interest payment date, or at such other address as may be furnished in writing by such Registered Owner to the Bond Registrar, and shall be paid by check or draft on the Bond Registrar mailed to such Registered Owner.

At least three (3) days prior to each interest or principal payment date for the Bonds, the County shall transfer to the Bond Registrar as Paying Agent an amount sufficient to pay the principal of and interest on the Bonds then due and payable, and the Paying Agent is hereby authorized and directed to apply such funds to said payment.

Section 6. Execution of Bonds. Without unreasonable delay, the County shall cause definitive bonds to be prepared, executed and delivered, which Bonds shall be typewritten or printed without engraved or lithographed borders. The Bonds shall be signed by the Chairman of the Board of the County and attested by the Clerk (all of which signatures may be by facsimile), and the facsimile seal of the County may be imprinted or reproduced thereon. The Bonds shall then be delivered to the Bond Registrar for authentication by the manual signature of an authorized officer thereof.

Until the definitive bonds are prepared, the County may, if deemed necessary by the Chairman of the Board, utilize a temporary Bond which shall be typewritten, and which shall be delivered to the purchaser of the Bonds in lieu of definitive bonds, subject to the same provisions, limitations, and conditions as the definitive bonds. The temporary Bond shall be dated as of the date of the Bonds, shall be in the denomination of $7,500,000, shall be numbered T-1, shall be substantially of the tenor of such definitive bonds, but with such omissions, insertions, and variations as may be appropriate to temporary Bonds, and shall be manually signed by the Chairman of the Board of the County, the Clerk, and authenticated by the Bond Registrar, and shall have the seal of the County impressed thereon.

In case any of the officers who shall have signed, or countersigned, any of the Bonds shall cease to be such officer of officers of the County before the Bonds so signed or countersigned shall have been authenticated or delivered by the Bond Registrar, or issued by the County, such Bonds may nevertheless be authenticated, delivered, and issued and, upon such authentication, delivery, and issue, shall be as binding upon the County as though those who signed and countersigned the same had continued to be such officers of the County. Any Bond may also be signed and countersigned on behalf of the County by such persons as at the actual date of execution of such Bonds shall be the proper officers of the County although at the original date of such Bond any such person shall not have been such officer of the County.

Only such of the Bonds as shall bear thereon a certificate of authentication in the form set forth in Exhibit “A,” manually executed by the Bond Registrar, shall be valid or obligatory for any purpose or entitled to the benefits of this Resolution, and such certificate of authentication shall be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated, and delivered hereunder and are entitled to the benefits of this Resolution.

Section 7. Bond Registrar. Wells Fargo Bank, National Association, Boise, Idaho, is hereby appointed as bond registrar, transfer agent, and authenticating and paying agent, and is herein referred to as the “Bond Registrar.” The Bond registrar shall keep, or cause to be kept, at its principal corporate trust office sufficient books for the registration and transfer of the Bonds which shall, at all times, be open to inspection by the County. The Bond Registrar shall do all things authorized by the Idaho Registered Public Obligations Act, Chapter 9, Title 57, Idaho Code, as amended. The Bond Registrar is authorized, on behalf of the County, to authenticate and deliver the Bonds transferred or exchanged in accordance with the provisions of such Bonds and this Resolution and to carry out all of the Bond Registrar’s powers and duties under this Resolution. For purposes of said Registered Public Obligations Act, this Resolution shall constitute a “system of registration” within the meaning, and for all purposes, of said Act.

The Bond Registrar shall be responsible for its representations contained in the Certificate of Authentication on the Bonds. The Bond Registrar may become the owner of the Bonds with the same rights as it would have if it were not the Bond Registrar.

The Bonds may be transferred only upon the books for the registration and transfer of Bonds, upon the surrender thereof at the principal office of the Bond Registrar, together with a form of transfer duly executed by the Registered Owner or his attorney duly authorized in writing, substantially in the form set forth in the form of Bond referred to in Section 6 hereof. Upon the transfer of any Bond, there shall be issued in the name of the transferee or transferees a new fully registered Bond or Bonds of the same aggregate principal amount as the surrendered Bond. The new Bond or Bonds shall bear the same date as the date of the surrendered Bond, but shall bear interest from the immediately preceding interest payment date to which interest has been paid or duly provided for. The Bond Registrar shall require the payment by the Registered Owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer.

The Bond Registrar shall not be required to exchange or transfer any Bond within fifteen (15) days of an interest payment date or, in the case of any redemption of Bonds, during the period from the Record Date specified by the Bond Registrar in the notice of redemption to the date of redemption.

Section 8. Redemption; Notice of Redemption. Bonds maturing by their terms on or before August 15, 2015, shall not be subject to call and redemption prior to their fixed maturity date. The County reserves the right to redeem any or all the Bonds maturing by their terms on or after August 15, 2006, in advance of maturity on August 15, 2015, or on any interest payment date thereafter, in whole or part, at the redemption price of par plus accrued interest to the date of redemption, from such maturities or parts thereof as shall be selected by the County and by lot in multiples of $5,000 within each maturity.

Notice of redemption shall be given by the Bond Registrar by first class mail, postage prepaid, not less than (30) nor more than sixty (60) days prior to the redemption date, to the Depository, and to the owner, as of the 15^th day prior to mailing the notice of redemption (the “Record Date”), of each Bond which is subject to redemption, at the address of such registered owner as it appears in the registration books of the County kept by the Bond Registrar, or at such other address as is furnished the Bond Registrar, in writing by such registered owner on or prior to the Record Date. Notice shall also be given by first-class mail to the fiscal agent of the County, if any, and to the Paying Agent, if other than the Bond Registrar, and to each nationally recognized municipal securities information repository (NRMSIR) and the Idaho state information depository (SID), if any, in accordance with the Continuing Disclosure Agreement referenced in Section 18 hereof. Each notice of redemption shall state the name of the Bonds, the Record Date, the redemption date, the place of the redemption, the principal amount and, if less than all, the distinctive numbers of the Bonds or portions of the Bonds to be redeemed, and shall also state that the interest on the Bonds designated for redemption in such notice shall cease to accrue from and after such redemption date and on said date there will become due and payable on each of said Bonds the principal thereof, interest accrued thereon to the redemption date, and premium, if any.

Each notice of redemption may further state that such redemption shall be conditional upon the Bond Registrar receiving for deposit into the Bond Fund created below, on or prior to the date fixed for redemption, moneys authorized by the County to be deposited in the Bond Fund that are sufficient to pay the principal of and interest and redemption premium, if any, on the Bonds to be redeemed and that if such moneys shall not have been so received the notice shall be of no force or effect and the County shall not be required to redeem such Bonds. If such a condition is included in the notice of redemption, then a notice stating sufficient moneys were not deposited and that no redemption occurred on that date shall be sent within a reasonable time thereafter, in like manner, to the registered owner of each Bond which was sent the notice of redemption.

If notice of redemption shall have been given as described above and the foregoing conditions, if any, shall have been met, the Bonds or portions thereof specified in said notice shall become due and payable at the applicable redemption price on the redemption date therein designated, and if, on the redemption date, moneys for the payment of the redemption price of all the Bonds to be redeemed, together with interest to the redemption date, shall be available for such payment on said date, then from and after the redemption date interest on such Bonds shall cease to accrue and become payable.

Any notice mailed as described above shall be conclusively presumed to have been duly given, whether or not the registered owner received such notice. Failure to give such notice or any defect therein with respect to any Bonds shall not affect the validity of proceeding for redemption with respect to any other Bonds for which notice has been properly given.

If less than all of the Bonds of any maturity are to be so redeemed, the particular Bonds or portion of Bonds to be redeemed shall be selected at random by the Bond Registrar in such manner as the Bond Registrar in its discretion may deem fair and appropriate. The portion of any registered Bond of a denomination of more than $5,000 to be redeemed will be in the principal amount of $5,000 or a natural multiple thereof, and in selecting portions of such Bonds for redemption the Bond Registrar will treat each such Bond as representing that number of Bonds of $5,000 denomination which is obtained by dividing the principal amount of such Bond by $5,000.

In addition to the foregoing notice, further notice shall be given by the Bond Registrar at least two (2) business days in advance of the mailed notice to registered owners, by registered or certified mail or overnight delivery service to all registered securities depositories then in the business of holding substantial amounts of obligations of types comprising the Bonds (for example Depository Trust Company of New York, New York). No defect in such further notice nor any failure to give all or any portion of such notice shall in any manner affect the validity of a call for redemption if the notice referenced in the preceding paragraphs is given as described above.

Section 9. Private Sale by Negotiation; Date of Sale. The County hereby finds, determines and declares that a private sale of Bonds by negotiation is in the best financial interest of the County. The timing, location, size and purpose of the issue require that the bond issue be negotiated at private sale rather than offered by competitive bid at public sale in order to obtain the most favorable terms for the County. The negotiated private sale of the Bonds is hereby authorized, approved and ratified pursuant to Idaho law. The Bonds shall be sold at negotiated private sale in accordance with this Resolution on August 10, 2005. No Bonds shall be sold for less than par and accrued interest to date of delivery.

Section 10. Notice of Intention to Sell and Official Statement. The notice of intention to sell the Bonds at negotiated private bond sale, as prepared by the County’s bond counsel, in conjunction with Wells Fargo Brokerage Services, LLC, is attached hereto as Exhibit “C” and by this reference is incorporated herein, and it is hereby approved and ratified. The Clerk has been directed to cause the Notice of Intention to Sell be published on behalf of the County, and the Notice of Intention to Sell has been published once in The Mountain Home News, a newspaper of general circulation within the County, at least three (3) days prior to the date of private sale. An Official Statement has also been prepared by the County, in conjunction with its financial advisor, and submitted to the Board. The Board hereby deems final the Preliminary Official Statement dated August 1, 2005 for purposes of Rule 15c2-12 under the Securities Exchange Act of 1934 and approved the distribution of the preliminary and final Official Statement by Wells Fargo Brokerage Services, LLC (“Wells”) and the Underwriter (defined below) and authorizes the execution thereof by the Chairman of the Board or other appropriate officer of the County.

Section 11. Acceptance of Purchase Proposal. The bond purchase contract, or the final acceptable bid form, attached hereto as Exhibit “D”, reflecting the purchase proposal (“Bond Purchase Contract”) of Wells Fargo Brokerage Services, LLC (the “Underwriter”), being in conformity with the requirements of this Resolution for the purchase of the Bonds, is hereby accepted and the Bonds are hereby awarded to the Underwriter. The Clerk of the County is hereby directed to notify the Underwriter of such action. The officers of the County are hereby authorized to deliver the Bonds to the Underwriter upon receipt of the purchase price and upon compliance with all conditions precedent to such delivery required by this Resolution and said Bond Purchase Contract, and are further authorized or directed to pay the costs of financing at the time of delivery of the Bonds, such costs being estimated in said Bond Purchase Contract or other documents furnished by the Underwriter or Wells, and to execute such other closing documents as are necessary or appropriate, in the opinion of counsel, to effectuate settlement on the Bonds.

Section 12. Capital Improvement Fund. There is hereby created and shall be maintained in the office of the Treasurer of the County, a fund and account separate and distinct from all other funds of the County, to be known as the “Elmore County, State of Idaho, General Obligation Bonds, Series 2005, Capital Improvement Fund” (the “Capital Improvement Fund”), or such other designation conforming to banking requirements and good accounting practices, into which shall be deposited all of the proceeds of the sale of the Bonds, except for any costs of issuing the Bonds paid on the date of closing and except for accrued interest, if any, which shall be deposited into the Bond Fund, hereinafter created. The Bond proceeds may be used to pay for costs of issuing the Bonds and the costs of the capital improvements heretofore authorized. In the event there are funds remaining in said Capital Improvement Fund after all expenditures for improvements as set forth herein above, any surplus funds shall be deposited into the Bond Fund and used for the payment of principal of and interest on the outstanding Bonds as the same shall accrue.

Section 13. Tax Levy. The Bonds are general obligation bonds of the County, and as such the full faith and credit of the County are hereby pledged for their payment. The officers now or hereafter charged by law with the duty of levying taxes for the payment of said Bonds and interest thereon shall, in the manner provided by law, make annual levies unlimited as to rate or amount upon all of the taxable property within said County sufficient in amount to meet the annual payments of bond principal and the semi-annual payments of interest maturing and accruing as set forth in Sections 3 and 4 herein above. Such taxes when collected shall be placed in the Bond Fund (hereinafter defined) and shall be used for no other purpose than for the payment of the principal and interest on the Bonds, so long as any of the Bonds remain outstanding and unpaid, but nothing herein shall be construed to prevent the County from paying the interest on or principal of the Bonds from any other funds available for that purpose or to prevent the County from levying any further or additional taxes which may be necessary fully to pay the interest on or principal of the Bonds. Principal or interest falling due at any time when the proceeds of ad valorem tax levies may not be available shall be paid from other funds of the County and may be reimbursed from the proceeds of such taxes when collected.

Section 14. General Obligation Bond Fund. The proceeds of taxes levied without limitation as to rate or amount to pay the principal of and interest on the Bonds, as set forth above, shall be kept by the Treasurer of the County in a special fund, which is hereby created, separate and apart from all other funds, and which is hereby designated “Elmore County, State of Idaho, General Obligation Bonds, Series 2005, Bond Fund” (the “Bond Fund”), or such other designation conforming to banking requirements and good accounting practices, which Bond Fund shall be used for no other purpose than the payment of the principal of and interest on the Bonds as the same fall due. Said Bond Fund shall be maintained by said Treasurer until the principal of and interest on said Bonds have been paid in full.

Section 15. Non-Arbitrage. The proceeds of the sale of Bonds shall not be used directly or indirectly to acquire any securities or obligations, the acquisition of which would cause any of the Bonds to be arbitrage bonds, within the meaning of Sections 103 or 148 of the Internal Revenue Code of 1986, as amended (the “Code”), and a certificate stating that the Bonds are not arbitrage bonds within the meaning of said Sections 103 or 148 shall be provided to the purchase at the time of delivery of the Bonds. The County covenants to and for the benefit of the holders of the Bonds from time to time that no use will be made of the proceeds of the issue and sale of the Bonds or any other funds or accounts of the County which might be deemed to be available proceeds of the Bonds pursuant to the provisions of Section 148 of the Code, and the applicable regulations, which, if such use had been reasonably expected on the date of delivery of and payment for the Bonds, would cause the Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code. Pursuant to such covenant, the County obligates itself to comply throughout the term of the issue of the Bonds with the requirements of Section 148 of the Code, and any regulations promulgated thereunder. In addition, the County shall execute a certificate stating that it will expend the proceeds of the Bonds on a time schedule that will comply with applicable Sections of the Code and that, therefore, the Bonds will be exempt from arbitrage rebate under Section 148(f) of the Code.

Section 16. Issuance Limitation. The County hereby represents that the County (including all “subordinate entities” of the County within the meaning of Section 265(b)(3)(E) of the Code) has the authority to levy ad valorem property taxes and reasonably anticipates not to issue in the 2005 calender year obligations bearing interest exempt from federal income taxation under Section 103 of the Code (other than “private activity bonds” as defined in Section 141 of the Code) in an amount greater than $10,000,000.00.

Section 17. Designation as Qualified Tax-Exempt Obligation. Pursuant to Section 265(b)(3) of the Code, the County hereby specifically designates the Bonds as “qualified tax-exempt obligations” within the meaning of Section 265(b)(3)(B) of the Code.

Section 18. Rule 15c2-12 and Continuing Disclosure Covenants. The County hereby covenants to comply with any applicable requirements of Securities and Exchange Commission Rule 15c1-12 (the “Rule”) with respect to any official statement and/or continuing financial disclosure with respect to the Bonds including without limitation the execution of a Continuing Disclosure Agreement for the Bonds. The County further approves the form of Continuing Disclosure Agreement between the County and the Bond Registrar (the “Continuing Disclosure Agreement”) in substantially the form presented to the Board at this meeting, and further authorizes the Chairman, Clerk, Treasurer or other officer of the County to execute the Continuing Disclosure Agreement. The County hereby “deems final” the aforesaid Preliminary Official Statement, as presented to the Board, for purposes of Rule 15c2-12(b)(1) and agrees that a final Official Statement will be furnished to the Underwriter of the Bonds within seven (7) business days afer the sale of the Bonds referenced in Section 9 above.

Section 19. Requirements Relating to Bond Insurance Policy. The Bonds may be insured under a Bond Insurance Policy (also hereinafter sometimes referred to as “Financial Guaranty Insurance Policy”), but only if any such policy will result in a lower true interest cost for the Bonds. The Chairman of the Board of Commissioners or the County Clerk is authorized to accept, arrange for and execute on behalf of the County all such appropriate and necessary bond insurance documents, and the Bonds shall be in such form, as may be required for such Bond Insurance Policy, if bond insurance is obtained.

Ambac Assurance Corporation (“Ambac Assurance”) has issued a commitment for a Financial Guaranty Insurance Policy relating to the Bonds. If and to the extent that said commitment is exercised by the County, the additional terms and provisions as set forth in Exhibits “E” through “J” are hereby authorized and are specifically incorporated into this Resolution.

Section 20. Severability. If any sentence, phrase, paragraph, section, or subsection of this Resolution shall be declared by any court of competent jurisdiction to be contrary to law, then the same shall be deemed separable from the remainder of this Resolution and shall in no way affect the validity of the other provisions of, or of any bonds issued pursuant to, this Resolution.

Section 21. Effective Date. This Resolution shall be full force and effect from and after its adoption and approval, as provided by law, and any requirement for the second and third readings hereof have been duly and properly waived by the Board.

EXHIBIT “A”

UNITED STATES OF AMERICA

STATE OF IDAHO

Registered No. R-

Unless this certificate is presented by an authorized representative of the Depository Trust Company, a New York corporation (“DTC”), to the County (defined below) or its agent for registration of transfer, exchange, or payment, and any certificate issues is registered in the name of Cede & Co. or such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.

ELMORE COUNTY, STATE OF IDAHO

GENERAL OBLIGATION BONDS, SERIES 2005

DATED DATE INTEREST RATE MATURITY DATE CUSIP

August 15, 2005 _______________ August 15, 20_____ ___ __

REGISTERED OWNER: *** CEDE & CO ***

PRINCIPAL AMOUNT: ***___________***

KNOW ALL MEN BY THESE PRESENT: That Elmore County, Idaho (the “County”), for value received, hereby acknowledges itself indebted and promises to pay pursuant to the provisions of Resolution No. ______ of the County adopted on August 10, 2005 (the “Bond Resolution”) providing for the sale and issuance of the County’s General Obligation Bonds, Series 2005 (the”Bonds”), to the above specified Registered Owner or registered assigns, on the maturity date specified above (the “Maturity Date”), the principal amount set forth above and to pay interest thereon from August 15, 2005, or the most recent date to which interest has been paid or duly provided for, at the rate specified above, payable on February 15, 2006, and semi-annually thereafter on February 15 and August 15 each year until the Maturity Date or prior redemption of this Bond.

Both principal of and interest on this Bond are payable in lawful money of the United States of America to the registered owner hereof whose name and address appear on the registration books of the County (the “Bond Register”) maintained by the Bond Registrar, which shall be Wells Fargo Bank, National Association, Boise, Idaho. Interest shall be paid by mailing a check or draft of the Bond Registrar on the due date to be the registered owner at the address shown on the Bond Register on the fifteenth (15^th) day prior to the interest payment date, or at such other address as may be furnished in writing by such registered owner to the Bond Registrar. Principal shall be paid to the registered owner upon presentation and surrender of this Bond on or after the Maturity Date or prior redemption at the principal office of the Bond Registrar.

The full faith and credit of the County are hereby pledged for the due and punctual payment of the principal hereof and interest hereon, and provision has been made in the statutory manner under the Bond Resolution for the levy and collection of taxes sufficient to pay the interest on this Bond as the same becomes due and for the payment of the principal hereof at the Maturity Date of this Bond.

This Bond is one of a duly authorized issue of Bonds of like date, tenor, and effect except for variations required to state numbers, denomination, rates of interest, and dates of maturity, aggregating $7,500,000 in principal amount, and is issued pursuant to and in full compliance with the Constitution and statutes of the State of Idaho, particularly Title 31, Chapter 19, and Title 57, Chapter 2, Idaho Code, as amended and proceedings duly adopted and authorized by the Board of Commissioners of the County, more particularly the Bond Resolution and also pursuant to the legal authorization of a Special Election conducted within said County on May 24, 2005.

Bonds maturing by their terms on or before August 15, 2015, shall not be subject to call or redemption prior to their fixed maturity date. The County hereby reserves the right to redeem any or all of the Bonds maturing by their terms on or after August 15, 2016, in advance of maturity, on August 15, 2015, or on any interest payment date thereafter, in whole or part, in the order of maturity selected by the County and by lots in multiples of $5,000 within any maturity at the redemption price of par, plus accrued interest to the date of redemption; provided, however, that notice of any intended redemption shall be given not less than thirty (30) nor more than sixty (60) days prior to the redemption date by first class mail, postage prepaid, to DTC and to the registered owner of any Bond to be redeemed at the address appearing on the Bond Register, and by mailing a copy of the redemption notice to registered securities depositories and others as provided in the Bond Resolution. The requirements of the Bond Resolution shall be deemed to be complied with when notice is mailed as therein provided, regardless of whether or not it is actually received by the owner of such Bond. Interest on all of such Bonds so called for redemption shall cease to accrue on the date fixed for redemption unless such Bond or Bonds so called for redemption are not redeemed upon presentation made pursuant to such call.

This Bond and the Bonds of this issue are issued for the purpose of paying for the acquisition, construction, improvement and installation of jail and associated law enforcement facilities for the County, together with other related improvements, equipment, capital items and costs, as more fully described in the Bond Resolution.

This Bond and the Bonds of this issue are general obligations of the County and the full faith and credit of the County have been pledged for the prompt payment of the principal of and interest on this Bond. The County have covenanted in the Bond Resolution to make annual levies of taxes on all taxable property in the County without limitation as to rate or amount to pay the principal of and interest on this Bond. The proceeds of said taxes shall be kept by the Treasurer of the County in the Elmore County, State of Idaho, General Obligation Bonds, Series 2005, Bond Fund (the “Bond Fund”) separate and apart from all other funds of the County. For a more particular description of said Bond Fund, the revenues to be deposited therein, and the nature and extent of the security afforded thereby, reference is made to the provisions of the Bond Resolution pursuant to which this Bond is issued and such Bond Fund will be maintained.

Bonds are interchangeable for Bonds of any authorized denomination of equal aggregate principal amount and of the same interest rate and maturity, upon presentation and surrender to the Bond Registrar.

Reference is hereby made to the Bond Resolution for the covenants and declarations of the County and other terms and conditions under which this and the Bonds of this issue have been issued.

The Bonds are designated by the County as “Qualified Tax-Exempt Obligations” under Section 265(b)(3) of the Internal Revenue Code of 1986 for the purpose of qualifying for exemption from the rule disallowing all interest deductions to financial institutions for interest payments and debt incurred or continued to purchase or carry tax-exempt obligations.

THIS BOND SHALL NOT BE VALID OR BECOME OBLIGATORY FOR ANY PURPOSE OR BE ENTITLED TO ANY SECURITY OR BENEFIT UNDER THE BOND RESOLUTION UNTIL THE CERTIFICATE OF AUTHENTICATION HEREON SHALL HAVE BEEN MANUALLY SIGNED BY THE BOND REGISTRAR.

IT IS HEREBY CERTIFIED AND DECLARED that all acts, conditions, and things required by the Constitution and statutes of the State of Idaho to exist, to have happened, been done, and performed precedent to and in the issuance of this Bond have happened, been done, and performed, and that the issuance of this Bond and the Bonds of this issue does not violate any Constitutional, statutory, or other limitation upon the amount of bonded indebtedness that the County may incur.

ADOPTED by the Board of Commissioners of Elmore County, Idaho, this 10^th day of August, 2005.

APPROVED by the Chairman of the Board of Commissioners of Elmore County Idaho, this 10^th day of August, 2005.

ELMORE COUNTY, IDAHO

/S/ Larry E. Rose, Chairman, Board of Commissioners

Attest: /s/ Gail L. Best, County Clerk

I, the undersigned, the Clerk of Elmore County Idaho, hereby certify that the foregoing Resolution is a full, true, and correct copy of a Resolution duly passed and adopted at a meeting of the Board of the County, duly held at the meeting place thereof on August 10, 2005, of which meeting all members of said Board had due notice, and at which a majority thereof were present; and that at said meeting said Resolution was adopted by the following vote.:

X AYES

NOES

ABSENT

ABSTAIN

I further certify that I have carefully compared the same with the original Resolution on file, and of record in my office; that said Resolution is a full, true, and correct copy of the original Resolution adopted at said meeting, and that said Resolution has not been amended, modified, or rescinded since the date of its adoption, and is now in full force and effect.

IN WITNESS WHEREOF, I have set my hand and affixed the official seal of said County on August 10, 2005.

/s/ Gail L. Best, County Clerk

IN WITNESS WHEREOF, the County by its duly constituted Board of Commissioners had caused this Bond to be executed by the facsimile or manual signature of the Chairman of the Board and attested by the facsimile or manual signature of the Clerk, and a facsimile of the seal of the County to be reproduced hereon, as of this 15^th day of August, 2005.

ELMORE COUNTY, IDAHO

By: (Facsimile or Manual Signature)

Chairman, Board of Commissioners

Attest: By: (Facsimile or Manual Signature)

County Clerk (FACSIMILE SEAL)

STATEMENT OF INSURANCE

Financial Guaranty Insurance Policy No.____ (the “Policy”) with respect to payments due for principal of and interest on this Bond has been issued by Ambac Assurance Corporation (“Ambac Assurance”). The Policy has been delivered to The Bank of New York, New York, New York, as the Insurance Trustee under said Policy and will be held by such Insurance Trustee or any successor insurance trustee. The Policy is on file and available for inspection at the principal office of the Insurance Trustee and a copy thereof may be secured from Ambac Assurance of the Insurance Trustee. All payments required to be made under the Policy shall be made in accordance with the provisions thereof. The owner of this Bond acknowledges and consents to the subrogation rights of Ambac Assurance as more fully set forth in the Policy.

CERTIFICATE OF AUTHENTICATION

This Bond is one of the Elmore County, State of Idaho, General Obligation Bonds, Series 2005, dated August 15, 2005, described in the within-mentioned Bond Resolution.

Date of Authentication: August ____, 2005.

WELLS FARGO BANK, NATIONAL ASSOCIATION

as Bond Registrar

By: (Manual Signature)

Authorized Officer

LEGAL OPINION

IT IS HEREBY CERTIFIED that a true and complete copy of the legal opinion of Skinner Fawcett, of Boise, which opinion was dated the date of delivery of and payment for the Bonds described therein, was delivered to me on said date, and is a part of the permanent records of the County.

ELMORE COUNTY, IDAHO

By: (Facsimile or Manual Signature)

County Clerk

******************************************

The following abbreviations, when used in the inscription of the face of this Bond, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN COM ---- as tenants in common

TEN ENT ---- as tenants by the entireties

JT TEN ---- As joint tenants with right of survivorship and not as tenants in common

UNIF TRFS MIN ACT ..........Custodian...........

(Cust) (Minor)

under Uniform Transfer to Minors Act ................

(State)

Additional abbreviations may also be used although not in the above list.

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto

Name of Transferee:_____________________________________________________________

Address:______________________________________________________________________

Tax Identification No. ___________________________________________________________

the within Bond and hereby irrevocably constitutes and appoints__________________________

to transfer said bond on the books kept for registration thereof, with full power of substitution in the premises.

Dated: ____________________________.

__________________________________

Registered Owner

NOTE: The signature on this Assignment must correspond with the name of the registered owner as it appears on the face of the within Bond in every particular, without alteration or enlargement or any change whatever.

SIGNATURE GUARANTEED:

_________________________________

Bank, Trust Company or Member Firm

of the New York Stock Exchange

By: ______________________________

Authorized Officer

EXHIBIT “B”

PRINCIPAL PAYMENT SCHEDULE

Maturity Date (August 15) Principal Amount

2006 $350,000.00

2007 $375,000.00

2008 $400,000.00

2009 $430,000.00

2010 $440,000.00

2011 $455,000.00

2012 $475,000.00

2013 $490,000.00

2014 $510,000.00

2015 $530,000.00

2016 $555,000.00

2017 $580,000.00

2018 $610,000.00

2019 $635,000.00

2020 $665,000.00

TOTAL $7,500.000.00

EXHIBIT “C”

NOTICE OF INTENTION TO SELL UP TO

$7,500,000

GENERAL OBLIGATIONS BONDS, SERIES 2005,

AT NEGOTIATED PRIVATE BOND SALE

AND

NOTICE OF MEETING OF THE BOARD OF COMMISSIONERS OF

ELMORE COUNTY, IDAHO

Pursuant to Title 31, Chapter 19, and Title 57, Chapter 2, Idaho Code, and other applicable law, public notice is hereby given by the Board of Commissioners of Elmore County, Idaho (the “County”) of negotiation for and private sale of up to $7,500,000 aggregate amount of the County’s General Obligation Bonds, Series 2005 (the ‘Bonds”). The Bonds will mature in annual installments of principal and at interest rates as fixed by the County, with the first payment of interest expected to be due on February 15, 2006, and semi-annually thereafter, and with the first principal installment expected to be due on August 15, 2006, and the final principal installment expected to be due on August 15, 2020. The Bonds will be authorized by a Bond Resolution or Ordinance expected to be adopted at a meeting of the County to be held at the regular meeting place of the Board of Commissioners in the Elmore County Courthouse, Mountain Home, Idaho, on Wednesday August 10, 2005, at 2:00 o’clock p.m., or such a later date and time as may be fixed by the Board of Commissioners. Notice is hereby given of said meeting of the County on the above-stated date and time for the purpose of authorizing and approving the issuance and sale of said Bonds. For additional information concerning the terms and provisions of the Bonds, the security for payment of the Bonds and other pertinent information relating to the Bonds, reference is made to documents available for public inspection at the offices of the County Clerk at the Elmore County Courthouse, Mountain Home, Idaho, Monday through Friday, 9:00 a.m. to 5:00 p.m. (telephone 208-587-2130). Further information is also available and may be obtained from Wells Fargo Brokerage Services, LLC, 3295 Elder St. , Suite 214, Boise, Idaho (telephone 208-393-4315; Attn: William Way).

EXHIBIT “D”

BOND PURCHASE CONTRACT

(attached)

EXHIBIT “E”

ADDITIONAL DEFINITIONS

The following additional definitions are those which apply to Ambac Assurance and specifically to Exhibits “E” through “J” of this Resolution:

“Ambac Assurance” shall mean Ambac Assurance Corporation, a Wisconsin-domiciled stock insurance company.

“Financial Guaranty Insurance Policy” shall mean the financial guaranty insurance policy issued by Ambac Assurance insuring the payment when due of the principal of and interest on the Bonds as provided therein.

EXHIBIT “F”

AMBAC ASSURANCE CONSENT LANGUAGE

The Resolution shall include the following consent provisions pertaining to Ambac Assurance:

A. Consent of Ambac Assurance.

Any provision of this Resolution expressly recognizing or granting rights in or to Ambac Assurance may not be amended in any manner which affects the rights of Ambac Assurance hereunder without the prior written consent of Ambac Assurance. Ambac Assurance reserves the right to charge the County a fee for any consent or amendment to the Resolution while the Financial Guaranty Insurance Policy is outstanding.

E. Consent of Ambac Assurance in lieu of Holder Consent.

Unless otherwise provided in this Section, Ambac Assurance’s consent shall he required in lieu of Holder consent, when required, for the following purposes; (i) execution and delivery of any supplemental Resolution or any amendment, supplement or change to or modification of the Resolution; (ii) removal of the Trustee or Paying Agent and selection and appointment of any successor trustee or paying agent; and (iii) initiation or approval of any action not described in (i) or (ii) above which requires Holder consent.

C. Consent of Ambac Assurance in the Event of Insolvency

Any reorganization or liquidation plan with respect to the County must he acceptable to Ambac Assurance. In the event of any reorganization or liquidation, Ambac Assurance shall have the right to vote on behalf of all Holders who hold Ambac Assurance-insured Bonds absent a default by Ambac Assurance under the applicable Financial Guaranty Insurance Policy insuring such Bonds.

D. Consent of Ambac Assurance Upon Default.

Anything in this Resolution to the contrary notwithstanding, upon the occurrence and continuance of an event of default as defined herein, Ambac Assurance shall be entitled to control and direct the enforcement of all rights and remedies granted to the Holders or the Trustee for the benefit of the Holders under this Resolution and pursuant to Idaho state law.

EXHIBIT “G”

NOTICES/INFORMATION TO BE GIVEN TO AMBAC ASSURANCE

Notices to be sent to the attention of the SURVEILLANCE DEPARTMENT:

A. While the Financial Guaranty Insurance Policy is in effect, the County or the Trustee or the County’s Dissemination Agent shall furnish to Ambac Assurance, upon request, the following:

(1) a copy of any financial statement, audit and/or annual report of the County

(2) such additional information it may reasonably request.

Upon request, such information shall be delivered at the County’s expense to the attention of the Surveillance Department, unless otherwise indicated.

B. A copy of any notice to he given to the registered owners of the Bonds, including, without limitation, notice of any redemption of or defeasance of Bonds, and any certificate rendered pursuant to this Resolution relating to the security for the Bonds, at no cost to Ambac.

C. To the extent that the County has entered into a continuing disclosure agreement with respect to the Bonds, Ambac Assurance shall be included as party to be notified.

Notices to be sent to the attention of the GENERAL COUNSEL OFFICE:

A. The Trustee or County or the County’s Paying Agent or Dissemination Agent shall notify Ambac Assurance of any failure of the County to provide relevant notices, certificates, etc.

B. Notwithstanding any other provisions of this Resolution, the Trustee or County or the County’s Paying Agent shall immediately notify Ambac Assurance if at any time there are insufficient moneys to make any payments of principal and/or interest as required and immediately upon the occurrence of any event of default hereunder.

Other Information to be given to Ambac Assurance:

The County will permit Ambac Assurance to discuss the affairs, finances and accounts of the County or any information Ambac Assurance may reasonably request regarding the security for the Bonds with appropriate officers of the County. The Trustee or County or the County’s Paying Agent or Dissemination Agent will permit Ambac Assurance to have access to the Project and have access to and to make copies of all books and records relating to the Bonds at any reasonable time.

EXHIBIT “H”

DEFEASANCE LANGUAGE

A. If applicable, any defeasance section or provision of the Resolution shall include the following language:

Notwithstanding anything herein to the contrary, in the event that the principal and/or interest due on the Bonds shall be paid by Ambac Assurance Corporation pursuant to the Financial Guaranty Insurance Policy, the Bonds shall remain Outstanding for all purposes, not be defeased or otherwise satisfied and not be considered paid by the County, and the assignment and pledge of any Trust Estate and all covenants, agreements and other obligations of the County to the registered owners shall continue to exist and shall run to the benefit of Ambac Assurance, and Ambac Assurance shall be subrogated to the rights of such registered owners.

B. Ambac Assurance will allow the following obligations to be used as Permitted Investments for defeasance purposes in refunding escrow accounts:

(Ambac Assurance does not give a premium credit for the investment of accrued and/or capitalized interest).

(1) Cash (insured at all times by the Federal Deposit Insurance Corporation);

(2) Direct Obligations of the United States of America; or

(3) Senior debt obligations of other Government Sponsored Agencies approved by Ambac.

EXHIBIT “I”

PAYMENT PROCEDURE PURSUANT TO THE

FINANCIAL GUARANTY INSURANCE POLICY

The following language sets out the applicable procedure for payments under the Financial Guaranty Insurance Policy and is hereby incorporated into the Resolution:

As long as the Bond insurance shall be in full force and effect, the County, the Trustee and any Paying Agent agree to comply with the following provisions:

(a) At least one (1) business day prior to all Interest Payment Dates the Trustee or Paying Agent, if any, will determine whether there will he sufficient funds in the Funds and Accounts to pay the principal of or interest on the Bonds on such Interest Payment Date. If the Trustee or Paying Agent, if any, determines that there will be insufficient funds in such Funds or Accounts, the Trustee or Paying Agent, if any, shall so notify Ambac Assurance. Such notice shall specify the amount of the anticipated deficiency, the Bonds to which such deficiency is applicable and whether such Bonds will be deficient as to principal or interest, or both. If the Trustee or Paying Agent, if any, has not so notified Ambac Assurance at least one (1) business day prior to an Interest Payment Date, Ambac Assurance will make payments of principal or interest due on the Bonds on or before the first (1^st) business day next following the date on which Ambac Assurance shall have received notice of nonpayment from the Trustee or Paying Agent, if any.

(b) The Trustee or Paying Agent, if any, shall, after giving notice to Ambac Assurance as provided in (a) above, make available to Ambac Assurance and, at Ambac Assurance’s direction, to The Bank of New York, as insurance trustee for Ambac Assurance or any successor insurance trustee (the “Insurance Trustee”), the registration books of the County maintained by the Trustee or Paying Agent, if any, and all records relating to the Funds and Accounts maintained under this Resolution.

(c) the Trustee or Paying Agent, if any, shall provide Ambac Assurance and the Insurance Trustee with a list of registered owners of Bonds entitled to receive principal or interest payments from Ambac Assurance under the terms of the Financial Guaranty Insurance Policy, and shall make arrangements with the Insurance Trustee (i) to mail checks or drafts to the registered owners of Bonds entitled to receive full or partial interest payments from Ambac Assurance and (ii) to pay principal upon Bonds surrendered to the Insurance Trustee by the registered owners of Bonds entitled to receive full or partial principal payments from Ambac Assurance.

(d) The Trustee or Paying Agent, if any, shall, at the time it provides notice to Ambac Assurance pursuant to (a) above, notify registered owners of Bonds entitled to receive the payment of principal or interest thereon from Ambac Assurance (i) as to the fact of such entitlement, (ii) that Ambac Assurance will remit to them all or a part of the interest payments next coming due upon proof of holder entitlement to interest payments and delivery to the Insurance Trustee, in form satisfactory to the Insurance Trustee, of an appropriate assignment of the registered owner’s right to payment (iii) that should they be entitled to receive full payment of principal from Ambac Assurance, they must surrender their Bonds (along with an appropriate instrument of assignment in form satisfactory to the Insurance Trustee to permit ownership of such Bonds to be registered in the name of Ambac Assurance) for payment to the Insurance Trustee, and not the Trustee or Paying Agent, if any, and (iv) that should they be entitled to receive partial payment of principal from Ambac Assurance, they must surrender their Bonds for payment thereon first to the Trustee or Paying Agent, if any, who shall note on such Bonds the portion of the principal paid by the Trustee or Paying Agent, if any, and then, along with an appropriate instrument of assignment in form satisfactory to the Insurance Trustee, to the Insurance Trustee, which will then pay the unpaid portion of principal.

(e) in the event that the Trustee or Paying Agent, if any, has notice that any payment of principal of or interest on a Bone which has become Due for Payment and which is made to a Holder by or on behalf of the County has been deemed a preferential transfer and theretofore recovered from its registered owner pursuant to the United States Bankruptcy Code by a trustee in bankruptcy in accordance with the final, nonappealable order of a court having competent jurisdiction, the Trustee or Paying Agent, if any, shall, at the time Ambac Assurance is notified pursuant to (a) above, notify all registered owners that in the event that any registered owner’s payment is so recovered, such registered owner will he entitled to payment from Ambac Assurance to the extent of such recovery if sufficient funds are not otherwise available, and the Trustee or Paying Agent, if any, shall furnish to Ambac Assurance its records evidencing the payments of principal of and interest on the Bonds which have been made by the Trustee or Paying Agent, if any, and subsequently recovered from registered owners and the dates on which such payments were made.

(f) in addition to those rights granted Ambac Assurance under this Resolution, Ambac Assurance shall, to the extent it makes payment of principal of or interest on Bonds, become subrogated to the rights of the recipients of such payments in accordance with the terms of the Financial Guaranty Insurance Policy, and to evidence such subrogation (i) in the case of subrogation as to claims for past due interest, the Trustee or Paying Agent, if any, shall note Ambac Assurance’s rights as subrogee on the registration books of the County maintained by the Trustee or Paying Agent, if any, upon receipt from Ambac Assurance of proof of the payment of interest thereon to the registered owners of the Bonds, and (ii) in the case of subrogation as to claims for past due principal, the Trustee or Paying Agent, if any, shall note Ambac Assurance’s rights as subrogee on the registration books of the County maintained by the Trustee or Paying Agent, if any, upon surrender of the Bonds by the registered owners thereof together with proof of the payment of principal thereof.

EXHIBIT “J”

INTERESTED PARTIES

In addition to the provisions listed in Exhibits “E” through “I” above, the following provision shall be and is incorporated into the Resolution:

A. Ambac as Third Party Beneficiary.

To the extent that this Resolution confers upon or gives or grants to Ambac any right, remedy or claim under or by reason of this Resolution, Ambac is hereby explicitly recognized as being a third-party beneficiary hereunder and may enforce any such right, remedy or claim conferred, given or granted hereunder.

Motion by Egusquiza, second by Cruser, to accept and sign the resolution.

ROSE - AYE

EGUSQUIZA - AYE

CRUSER - AYE Motion carried and so ordered.

Motion by Egusquiza, second by Rose, to sign the Blanket Issuer Letter of Representations.

ROSE - AYE

EGUSQUIZA - AYE

CRUSER - AYE Motion carried and so ordered.

The construction account was discussed. Also Mr. Way stated an official transcript will be coming and Skinner and Fawcett will be doing the closing. Commissioner Egusquiza asked about title insurance and Mr. Way stated there would be no title insurance. Mr. Way stated it would be up to the Construction Manager regarding title insurance.

Mr. Way apologized again for the way the sale was handled and he stated he would investigate why the bonds weren’t offered to local brokers.

Motion by Rose, second by Egusquiza, to adjourn.

ROSE - AYE

EGUSQUIZA - AYE

CRUSER - AYE Motion carried and so ordered.

/s/ LARRY E. ROSE, Chairman

ATTEST: /s/ GAIL L. BEST, Clerk